Future for local and regional media - Culture, Media and Sport Committee Contents


5  Local media online

219. The biggest change to the local and national media landscape over the past two decades is the emergence of new technology. There is now much more choice for people using media - whether it is audio, video or text - as digital technologies and the internet offer alternatives to traditional media platforms. The impact of the new digital age was summed up by Lord Carter in the introduction of the final Digital Britain report:

    On 26 August 1768, when Captain James Cook set sail for Australia, it took 2 years and 320 days before he returned to describe what he found there.

    Yesterday, on 15 June 2009, 20 hours of new content were posted on YouTube every minute, 494 exabytes of information were transferred seamlessly across the globe, over 2.6 billion mobile minutes were exchanged across Europe, and millions of enquiries were made using a Google algorithm.[247]

220. The digital world is a global one yet the impact it has had on local media is significant. The whole premise of the Government's Digital Britain review and subsequent Digital Economy Bill is to make sure the UK media industries and their regulators are equipped to deal with, and can maximise the benefits of, the new digital era.

221. The local media organisations that operate on traditional platforms argue that the increased competition for people's media consumption and advertising revenues, as well as issues such as the exploitation by search engines of the media's content, has effectively caused a crisis in traditional local media. We have also heard evidence that the internet offers a new platform and a degree of localness not available from traditional media, including interactive 'hyper-local' services. Although the recession has affected advertising revenues on the internet, it would appear that the impact was nowhere near as serious as it was for print media.

The impact of technology on the local media landscape

222. Internet technology is now a regular feature of most domestic, educational and work environments. Recent Ofcom research showed that 77% of the UK adult population owned a home computer and 73% of the population had access to the internet either at home or elsewhere. The same research showed that 70% of UK adults accessed the internet every day, and in the 15-44 age group that figure roses to 78%.[248]

223. In evidence to our inquiry, Ofcom noted that while regional television news viewers and local newspaper readership were skewed towards older age groups, the young were leading the take-up of local media online. Ofcom also suggested that growth in internet use as people's main source of local news had, to some extent, been at the expense of other media, with one-quarter of those accessing local newspaper websites saying that they did so instead of reading the hard copy.[249] Ofcom also reported that the proportion of adults citing television as their main source of local news had remained stable since 2002, at around half of all adults. In contrast, 32% said local newspapers were their main source of local news in 2002, by 2008 this had fallen to 23%.[250]

224. The implications of the changes in consumer behaviour have been noted by Rupert Murdoch, who in a recent interview said:

    I can see the day, maybe 20 years away, where you don't actually have paper and ink and printing presses. I think it will take a long time and I think it's a generational thing that is happening. But there's no doubt that younger people are not picking up the traditional newspapers.[251]

225. It is unlikely that in 20 years there will be no hard-copy newspapers, but Rupert Murdoch's point is a pertinent one. It is not just that young people are not reading traditional print newspapers but that there is also increased competition for their readership from non-newspaper internet blogs, wikis and forums as well as a growing number of hyper-local news initiatives that are providing local news and interactive features on community issues.

226. There are large global, media organisations who are also venturing into local media. Google has become a household name for its search engine, but we have heard some criticisms of its news aggregation service, Google News, which newspaper groups claim has exploited local media content and diverted advertising revenue and readers away from local newspapers.

Google and online advertising

227. Google News is an automated news aggregator provided by Google Inc. launched in 2002, currently providing information from more than 4,500 news sources. In 2006 an archive was added to include articles from the past 100 years, as well as a mobile version of the product. Google News provides, on its front page, a summary of top news stories from various sources, followed by summaries of news stories for various categories (business, entertainment, sport etc); or specific search terms and filters, including your local town, which can be entered. This means that the user can call up a digest of news stories for their local area, with links to the originating source - often the website of a local newspaper.

228. News aggregation, and specifically Google News, has attracted considerable criticism from local media groups. The Chief Executive of Trinity Mirror, Sly Bailey, referred to "the super dominant position of Google and Google News,"[252] and told us that "they [Google] do not spend a penny on any kind of journalism at all and yet they are making money out of our journalism."[253] Carolyn McCall from Guardian Media Group referred to it as a "no-win"[254] situation, with newspapers unable to remove their content from Google as this would be even more damaging to their businesses.

229. The notion that Google is profiting from third party content, in which it does not invest, is very much the theme of the criticisms we have heard about Google News. The Newspaper Society told us:

    [the industry] has suggested that the Government should urgently explore in consultation with publishers effective ways in which Google and others should be prevented from profiting from third party content, without recompense to, or the consent from, the media companies who generated the material upon which they have built their businesses.[255]

230. The NUJ put forward a similar argument:

    The problem is that Google itself doesn't actually produce any content - it just lives off the work of others, and that has to be paid for. However given that there are fewer adverts for content producers to fight over then there is less money to pay creators and so media companies axe journalists, photographers and editors.[256]

231. In response to these criticisms Matt Brittin, Managing Director of Google UK, told us that he refuted any allegations that Google or Google News stole content:

    We do not steal content. If you look at Google Search and Google News what you will find is what we call snippets - little line and a link that will take you through to the originator's website. That is accepted as being in line with copyright law worldwide. It is seen in the same way as a newspaper article quoting lines from a book in a book review. That is the kind of use of copyright content that we make, so we absolutely fiercely defend copyright owners' rights and it is wrong to paint us as stealing content.[257]

232. He also stated that he thought Google News could actually assist local newspapers by helping people find local news content online and by directing searchers to local newspaper websites.[258] Mr Brittin described Google as a "virtual newsagent"[259] that could offer online distribution for news content and, he said, unlike actual newsagents Google did not charge news providers for the service.[260]

233. Mr Brittin also highlighted some of Google's innovations that could enhance the online presence of local newspapers. Firstly, the "Ads by Google" service where Google could facilitate targeted advertising for other websites and where most of the revenue goes to the publishers of the original story. Secondly the new "Fast Flip" service, currently being piloted in America, which would allow readers to flick through the pages of an online newspaper to find the content that they wanted to read.[261] Mr Brittin also stressed that although Google web search carried targeted advertising, Google News did not, in fact, carry advertising at all. He told us that news content was not particularly attractive to advertisers, because it was often covering tragic or unpleasant events that advertisers did not want to associate their brand with, and also that people searching the web for news were not usually doing so in order to make a purchase:

    News queries typically are not queries where advertisers want to appear and do not have a commercial intent behind them, so, as I say, if you are searching for 'bomb in Baghdad' it is unlikely that you are looking to make some kind of acquisition in relation to that query and therefore there is no market to cover there. [262]

234. What seemed to add to the frustrations of the local media groups was their claimed inability to get together as news publishers and discuss the collective complaints they had about Google News with Google. This was described to us by Carolyn McCall of Guardian Media Group:

    At the moment, because of the competition law, because of collusion, we as publishers cannot sit down in a room together and talk about the issue of aggregators. We cannot sit down and say, 'What can we do about this? Can we go together to Google?' We would be in collusion so therefore as individual players we have to think about this or come to select committees like this and say, 'This is a really big issue.' We cannot sit in a room, even with lawyers, and do this because it would be deemed anticompetitive.[263]

235. On 1 December 2009, Google announced changes which would allow publishers to set a limit on the number of free articles readers could access through Google News and websites indexed in Google Web Search. This has been reported as "a reaction to concerns in the newspaper industry that Google is using newspaper content unfairly."[264] These changes mean that users who click on more than five articles in a day may be routed to the payment or registration pages of the originating website. This could solve the problem whereby users clicking on links from Google News are taken straight to news articles, bypassing some sites' subscription systems. However, there is still concern amongst the industry that users of Google News may not click through to the originating website at all, but instead just read the aggregated 'snippets' that appear on the return of the search results.[265]

236. We acknowledge the concerns local newspaper publishers have about news aggregation. At a time when there are such significant changes in the way that people consume their news, user-friendly mechanisms that offer consumers the ability to scan headlines from, and click through to, a vast range of alternative news sources must appear to be a targeted threat to the traditional media formats.

237. We are concerned at local newspaper groups' claims that they are unable to undertake any collective industry discussions about the issues raised by aggregators without it breaching competition law. We recommend that this apparent restriction be considered by the Office of Fair Trading and that guidance is given, as appropriate, on the extent to which such discussions can be held without being deemed anti-competitive.

238. We welcome Google's recent changes to Google News and Google Web Search regarding the number of articles which can be freely accessed on sites requiring subscription or registration. While Google's success in news aggregation has been achieved through innovation rather than aggression and is not in breach of international copyright laws, its changes demonstrate a welcome awareness of the problems faced by local newspapers and other traditional publishers. It seems clear that Google's business is having a significant impact on traditional publishers' economic models and so we welcome new facilities such as Fast Flip and hope Google is sensitive to the need to maintain diverse, pluralistic sources of local news and information.

239. The wider criticism we have heard about Google is the dominance of its position in online web searching and advertising, particularly in light of the growth of advertising revenues in the online world and the level of migration from traditional media. Enders Analysis told us that Google Inc's net profits had increased by over 2,000% since 2003, and that 97% of Google's total revenue comes from advertising.[266]

240. Newspaper publishers are critical of Google's use of targeted advertising on its search engine. As Trinity Mirror told us:

    [Google] use a targeted advertising model to poach large and small advertisers from regional newspapers across all of these advertising categories. In the past, only regional newspapers and directories such as Yellow Pages were able to match local advertisers with local audiences: now we compete with Google whose very business model is based on this kind of targeting. Search advertising was estimated by Enders to be worth around £2 billion in 2008, compared to £2.3billion for regional newspaper advertising, and is expected to grow by 4.5% in 2009.[267]

241. Matt Brittin refuted these allegations, and said that to accuse Google of "poaching" advertisers suggested there was some sort of ownership over them, which was not the case.[268]

242. Local media companies have told us that the strong position of Google, not just over traditional forms of media but also its dominance over other search engines, makes competition very difficult.[269] We asked the OFT whether it was concerned about the strength of Google. John Fingleton, OFT Chief Executive, told us:

    We certainly are aware of the size and impact of Google. The complaints that have come to us thus far about Google have been competitor complaints, competitors who are not pleased with the fact that Google makes a better offering to their customers. That type of concern in principle is not something that would precipitate an investigation by us.[270]

243. Mr Fingleton also explained that Google operated in a global market and it was unlikely that any competition issues would arise in the UK that were not replicated elsewhere in the world, and that this has not happened.[271] With respect to the specific issue of Google's online advertising revenue, Mr Fingleton said:

    If a significant share of expenditure goes on one company and that company previously inherited that position from state ownership or from some feature of the market that means that consumers cannot switch, we would be concerned. Where a company achieves that position through superior innovation, foresight or better targeting of its customers we would be very wary about intervening.[272]

244. We agree with the Office of Fair Trading's assessment of Google's position in the media landscape: Google has achieved its dominant status from successful innovation and investment in online technologies and services which has provided significant consumer benefits.

245. Local newspaper publishers have been very critical of Google, yet their criticisms have, in our view, lacked focus. Newspapers can opt out of Google News and Web Search, and Google has made attempts to work with newspaper publishers by facilitating the advertising for their websites, which we welcome. We recognise that the changes being brought in the online world are creating huge disruption to the traditional business models of local newspapers and other media companies, resulting in both threats and opportunities. Where there are clear problems that can be addressed by public policy changes and regulatory intervention, we can recommend that action be taken. However we have not heard any evidence that suggests this is the case with the complaints from newspaper publishers about Google.

The future for local and regional news online

246. Throughout this Report we have described the pressures on local media groups in the digital age. The challenges posed by the growth and development of digital media are possibly the biggest the industry has ever faced. How traditional print media competes with and utilises the internet is going to be the key to its sustainability in the digital age. The growth in the use of the internet at work, home and in education will not be reversed and internet technologies look set to keep innovating with more products becoming available to make access to the internet faster and more portable.

247. As already discussed in paragraph 224, Rupert Murdoch, who owns one of the largest media groups in the world, News Corp, has said that he does not think that newspapers will exist in hardcopy at some point in the future, perhaps in 20 years time.[273] Last year News Corp announced that it would be introducing a "pay-wall" to the online versions of all of its newspapers, which would require readers to subscribe in order to read the full contents of stories.[274]

248. The introduction of paid content by such a major publisher could be a significant event in terms of the future of local, as well as national, media. Currently, internet users generally expect to navigate their way around the internet and consume information without charge. If pay models were to be proved successful and widely adopted, this could change the economics of the provision of online news content.

249. However, Paul Bradshaw, Professor of Online Journalism at Birmingham City University, said he was sceptical about the success of paid content online. He told us:

    If you look at previous experiments with pay-walls, typically traffic to a website will drop between 60 and 90%, so you lose an enormous proportion of your readers. Whether or not you can make that up, you are going to be able sell advertising for more per reader because you know more about those readers because they are more loyal readers and so on, so they are more valuable to advertise to, but if there is enough of them to make up for that and if they paying enough to make up for that - again the evidence suggests that people are not particularly willing to pay for them -then I do not think it is going to work unless they look at the package they are selling.

    [...]people never bought news, they bought a newspaper which was a package which had certain functions: it was portable, it was high resolution, it was serendipitous. Online they are not selling any kind of package that I can see and if you look again at successful business models online, it is about selling packages.[275]

250. The creation of new, innovative web models by local newspaper publishers that would attract users and be profitable would require significant investment by local media groups in online technology, and we have heard that advertisers can be reluctant to place their products around news content. However, with the introduction of IFNCs, and potentially more pay-walls being put up by global and national companies, there could be options for local newspaper publishers to become profitable multi-platform operators. The Press Association has however drawn our attention to the impact of structural change on journalism, and the need for "major re-skilling of regional and local print journalists to give them the skills to operate in multi-platform businesses"[276] which would create additional costs.

251. The benefits of online technologies for consumers are considerable, and the appeal of the internet for advertisers is only likely to increase. The competition for readers and advertising revenues on the internet is fierce given the lower costs of entry into the online world, compared with entry into print media.

252. However there are encouraging developments that could help local news publishers to become multi-platform news providers. IFNCs could offer a shared skill and resource base that would help local newspapers make the transition to becoming online publishers as well as print publishers. We also note that some publishers are experimenting with different business models for the provision of online content.

Hyper-local websites and blogs

253. In recent years there has been a growth in the number of hyper-local websites and blogs dedicated to local and community issues that are often interactive, in some way, with their audience. The relatively small start-up and maintenance costs of web-based projects such as hyper-local websites and blogs, as opposed to the heavy costs of print and distribution, mean that there is a smaller risk in setting them up, but also a smaller financial return. The use of volunteers and 'crowd-sourcing (where a question is put to the readership who can then all offer contributions to the answer), also means that content itself can be produced quite cheaply.

254. Paul Bradshaw described to us how these initiatives have been established in the local media landscape:

    Already you are getting a very significant, what you might call, hyper-local movement of publishers who are passionate about their local area and particularly frustrated by the lack of coverage that they do get in the local press because the local press has got such an enormous patch to cover and, if you like, a commodified approach to news, but they are trying to plug the gaps they see local newspapers leaving behind them as they cut costs.[277]

255. Mr Bradshaw went on to say that there was also scope for hyper-local websites to cover local democracy and the "bread and butter"[278] material traditionally covered by local newspapers, as newspapers have increasingly found this coverage expensive and "not particularly editorially attractive"[279] whereas a hyper-local website would have fewer costs and overheads and could explicitly seek to cover local activities.

256. There are, however, issues about the quality and the regulation of the hyper-local movement. Claire Enders told us she did not believe that bloggers could ever take the place of traditional journalism:

    It is not really possible to replace professional journalism which has been honed and trained. The people who work in the press are highly trained individuals; otherwise they would not still be there. You have to be able to do stories very quickly, you have to have an inquiring mind. [...] We are a very literate nation, so it is a calling that has attracted many very fine people. Those people may well, as indeed they already do, engage in blogging but they are going to have to make a living during the day, whatever it is ie washing cars or whatever - and they will not be able to spend the time or be paid to spend the time to investigate local politics, or local issues which are of extraordinary interest.[280]

257. In response to these concerns about the editorial control of blogs, Paul Bradshaw told us that in fact hyper-local bloggers could offer a level of transparency that you did not get with traditional journalism, as well as an interactivity with the readership which can act as a quality control:

    For the hyper-local publishers, bloggers, one key element of quality is transparency. If you report on a council meeting, then you link to the full minutes, you put all of that in its full form. It is interesting because I have been looking at a lot of council coverage in local newspapers and it is very much second and third-hand, you are getting very small quotes and it is not clear if that is from a press release, directly from a phone call or the meeting. A blogger would link to as much as possible and would link to the full transcript. The other, if you like, quality mark is right of reply. One of the cultures of blogging is around providing an opportunity for people to put their points of view across, correct things and update things whereas in print once a deadline has passed, that is it, you forget about it.[281]

258. If hyper-local websites become more widespread there is the question of who should regulate their content. Ofcom has told us it does not think that it should regulate blogs.[282] The Chairman of the Press Complaints Commission, Baroness Buscombe, has also said that any regulation of bloggers should not be statutory and should be done by consent.[283] Bloggers can currently join the PCC voluntarily, although there is a subscription cost which is calculated by circulation, which in terms of blogs is problematic to calculate and potentially prohibitively high.[284] This falls into a wider debate about the regulation of online content, and is not the focus of our current inquiry, but it does indicate a potential scrutiny gap.

259. There is also the question of whether such services can be economically viable. As we have discussed, hyper-local sites and blogs are relatively low cost to run, but revenues and profitability are potentially lower. We asked Paul Bradshaw if he thought there was a economically sustainable model for hyper-local news and he told us there were a number of models that offer viability for these types of website:

    One of those is a franchise model, strangely. There is an organisation called 'AboutMyArea' which effectively sells the ability to report on a particular postcode and that is their business model. I am not sure how long-term sustainable that is, but that is one model. Another model is consultancy effectively and that seems to be the model of Talk About Local, a network of hyperlocal blogs [...]. The blog itself might not make any money, but the people who are operating those sell their services elsewhere and effectively that blog demonstrates their abilities. Then the third model is the traditional advertising model and the key thing here is, as Ed Roussel himself from The Telegraph put it very succinctly a couple of weeks ago when I was down: 'Print publishing and broadcast publishing have high costs of entry and high margins; online publishing has low costs of entry and quite often low margins', unless you are someone like Google. For those bloggers the margins they can get are fine, they are sustainable and they can live on advertising, for example.[285]

260. He also said that he hoped that local newspapers would engage with these hyper-local start-ups, thereby improving investigative journalism.[286] He argued that if local newspapers left the bigger stories to news agencies and the BBC, they could focus solely on local investigative journalism in conjunction with hyper-local websites.[287]

261. Hyper-local blogs and websites can offer a valuable service to local communities. Their greatest qualities are their interactivity with their readership and the exchange of local information and discussion that they facilitate. At a time when some local newspapers are struggling to survive, some local blogs are beginning to fill the gaps that a receding local press is leaving behind. Hyper-local websites can potentially also be good for maintaining local identity and can provide healthy scrutiny and discussion of local democracy and local issues, which is to be encouraged.

262. Local newspapers can learn from many of these innovative websites, and in some cases there is an argument that local newspapers should be working alongside them. However this is not to say that local newspapers are no longer relevant. There is still, and will always be, a need for local professional journalism. Local newspapers will retain a role and a relevance particularly for the segments of society that do not, or cannot, use the internet.

263. We endorse the sentiment that it is local journalism, rather than local newspapers, that needs saving. The two are far from mutually exclusive, but newspapers need to be innovative in the way they train their journalists to work in a multi-platform world.



247   Digital Britain, final report, p 3 Back

248   Ofcom, Technology tracker quarter 4 2009, December 2009, Ofcom.org.uk  Back

249   Ev 171 Back

250   Ev 171 Back

251   "Predicting the end of paper and ink", The Guardian online, 9 June 2009, guardian.co.uk Back

252   Q 46 Back

253   Ibid. Back

254   Ibid. Back

255   Ev 244 Back

256   Ev 160 Back

257   Q 474 Back

258   Ibid. Back

259   Ibid. Back

260   Q 475 Back

261   Q 483 Back

262   Q 478 Back

263   Q 63 Back

264   "Google to limit free news access", BBC News Online, 2 December 2009, news.bbc.co.uk Back

265   Q 63 Back

266   Ev 232 Back

267   Ev 233 Back

268   Q 468 Back

269   Q 63 Back

270   Q 404 Back

271   Ibid. Back

272   Q 406 Back

273   "Predicting the end of paper and ink", The Guardian online, 9 June 2009, guardian.co.uk Back

274   "Rupert Murdoch Before the Federal Trade Commission's Workshop: From Town Crier to Bloggers: How Will Journalism Survive the Internet Age?", News Corp press release, 1 December 2009  Back

275   Q 508 Back

276   Ev 243 Back

277   Q 500 Back

278   Q 502 Back

279   Ibid. Back

280   Q 12 Back

281   Q 503 Back

282   Q 385 Back

283   "Baroness Buscombe speech to the annual conference of the Society of Editors", Press Complaints Commission news release, 15 November 2009 Back

284   Q 509 Back

285   Q 505 Back

286   Q 506 Back

287   Ibid.  Back


 
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